Global stocks rose in erratic trading on Tuesday following the previous day’s selloff and mounting concerns of a possible recession in the United States.
The Dow Jones Industrial Average was up about 300 points by 9:45 a.m. ET after it dropped more than 1,000 points on Monday. The S&P 500 and the Nasdaq Composite also posted modest gains on Monday morning.
Over the past five days of trading, the Dow Jones has shed about 1,800 points, or over 4 percent. The S&P 500 lost 3 percent on Monday, while the Nasdaq dropped 3.43 percent, extending a recent sell-off as fears of a possible U.S. recession spooked global markets.
Stronger-than-expected profit reports from several big U.S. companies helped support the market. Kenvue, the company behind Tylenol and Band-Aids, jumped 13.5 percent after reporting stronger profit than expected thanks in part to higher prices for its products. Uber rolled 4.3 percent higher after easily topping profit forecasts for the latest quarter.
The Nikkei 225 index in Japan saw a 10 percent rebound overnight after it plunged 12.4 percent on Monday. European markets have bounced between a daily loss of 0.5 percent and a gain of 1 percent.
“If you wake up in the morning to discover that Japan is down 10 to 12 percent, it’s going to scare the daylights out of the sanest person in the world, so it’s understandable that people take flight,” IG chief market strategist Chris Beauchamp said.
“On the flipside, I think people got a bit carried away yesterday and it always seems very dramatic at the time,” he said. “It’s normal to see weakness this time of year. The question is—was that enough to reset markets or is there going to be more?”
On Monday, officials with the Federal Reserve sought to reassure investors, with Chicago Fed President Austan Goolsbee saying the central bank will move to “fix” the economy should it deteriorate.
“The Fed’s job is very straightforward: maximize employment, stabilize prices and maintain financial stability. That’s what we’re going to do,” he said on CNBC’s “Squawk Box” program. “We’re forward-looking about it. So if the conditions collectively start coming in like that on the through line, there’s deterioration on any of those parts, we’re going to fix it.”
Meanwhile, San Francisco Fed President Mary Daly said hours later that the central bank has the “extremely important” job of preventing the U.S. labor market from entering a downturn. She signaled that a cut in interest rates is likely forthcoming.
“How much that needs to be done and when it needs to take place, I think that’s going to depend a lot on the incoming information,” she said at a forum in Hawaii on Monday.
“We will do what it takes to ensure what we achieve both of our goals, price stability and full employment,” she also remarked. “We will make policy adjustments as the economy delivers the data and we know what is required.”
Last week, Labor Department figures show that the number of Americans filing new applications for unemployment benefits increased to an 11-month high while last month job gains slowed. The unemployment rate ticked up to 4.3 percent as only 114,000 jobs were added, according to the Bureau of Labor Statistics.
